June 20, 2012

... by Eduardo Porter, who acknowledges what would seem to be a crushing formula for the destruction of the private insurance business: If everyone can buy insurance at the same price whenever they want, people won't buy until they've got expenses that insurance will cover and that go beyond the price of the insurance, and this will cause the price of the insurance to spiral upward and fewer and fewer people will buy. It makes no sense. But Porter has an idea. Maybe that won't happen.

Yet the portrayal of Americans as pure profit-seeking machines relentlessly on the lookout for a bargain is not entirely accurate....

[T]here is plenty of evidence that other motivations influence our decisions: altruism, for instance. We like to believe we are fair and worthy. And we are willing to sacrifice some gain to fit the norms of society....

Nice generalities, but you're talking about making millions of people apportion a huge chunk of their income to pay for something that they are not getting any benefit from. (They can keep their money, pay their own health-care expenses, and start buying insurance only at the point where the benefit outweighs the cost... which is the standard way we make decision about what to buy: Does the benefit outweigh the cost?)

Social norms explain why we tip a cabdriver we will never see again, why cheaters blush when caught or why people go to the polls despite knowing their individual vote will make no difference. Government programs to help underwater homeowners have been held back for years over fear that they will encourage families who were still current with their mortgage payments to default. However, the evidence so far is that most people who can pay their mortgage do, even if they would profit from walking away.

Social norms can provide a much more powerful incentive than money. A few years ago, a handful of day care centers in Israel tried to get parents to pick up their children on time by imposing a fine for tardiness. Much to their surprise, tardiness mushroomed. The fine had somehow made it acceptable, erasing the shame parents used to feel when they were late. The fine, by contrast, was cheap.

Advocates of health reform argue that the individual mandate will create a social norm that will hold everything together. Without it, people merely have a subsidy to induce them to buy insurance. The mandate turns buying health insurance into the rule of the land, like paying taxes....

None of these examples involve getting people to suddenly start following a new norm. In the Israeli day care situation, parents were given a way to buy out of the old norm, and they did. It was worth it. (And the old norm was weak anyway.) How would you get to a new norm, especially one that expects people to ignore huge new expenses? Especially when the norm is about something a majority of the people have been trying to avoid and that comes from government norm-imposers?

Tipping the taxi driver isn't a new idea, and it doesn't come from the government. It bubbled up through the culture over a long period of time. We don't know why we feel we're supposed to do it and that feeling is enough to get us to let go of a little money. But many — not all — of us do.

How do you "create a social norm"? Surely, it takes more than passing a statute — especially a statute that barely squeaks through the legislature and that is widely denounced for years as unconstitutional. The government tried to require it, that violated our deeply treasured fundamental law, but, yeah, now I'm going to internalize the now-not-required requirement and do it by force of psychological urge to follow norms! That makes no sense.

And yet... for social norms to work, they probably need to be perceived as legitimate.

Yeah, probably.... Actually, I don't even see how something gets to be called a "social norm" until it's been internalized psychically, which takes a lot more than perceiving it as legitimate. And what we have here is something that's perceived as illegitimate. And this is before any announcement from the Supreme Court saying the government overreached its powers.

Making the mandate work requires convincing Americans that the new health care law is not a plot to destroy the nation. Americans would have to embrace universal coverage as a desirable goal for a rich industrial society.... The Supreme Court’s decision will be beside the point.

No, it won't be. The Supreme Court decision will add to the perception that this is not a norm. And your point is that people will need to feel it is a norm. How do you get there? All you're saying is: It could work if we got there.

We tip a cab driver (or waitress) because we're paying a little bit above what we must, for service above what must be given. It doesn't matter at all that we'll never see the cabbie again. Giving the tip and maintaining the expectation means that our *next* cabbie will expect that if he does a good job, he'll get a little extra.

In any case, it's not altruism! It's an exchange of value, which studies have shown make both parties feel good. If someone feels forced to tip for bad service, they feel bad, resentful, and grumpy.

I used to be shocked by the lengths people would go to prove the irrational rational - I mean, they would really work at it - and then 53% of Americans voted for the least experienced, least qualified candidate ever nominated by a major political party for president.

I've decided people are not rational.

They want what they want for whatever *reason* they want it, most likely for irrational reasons.

Social norms is why we were supposed to believe that only the truly desperate woman who really needed one and would have been driven to a back-alley to get one, would ever get an abortion if they were safe and legal.

Same, divorce.

Social norms mean that neither of those things are ever done lightly, right?

"However, the evidence so far is that most people who can pay their mortgage do, even if they would profit from walking away."

-- That's because they would lose the home if they walked away. If you did what the government offers, letting you both keep the house AND not pay, I bet the evidence would change.

"Social norms explain why we tip a cabdriver we will never see again, why cheaters blush when caught or why people go to the polls despite knowing their individual vote will make no difference."

-- All three of these examples the author gave are wonky. You tip because you may not see that cab driver, but because you will see -a- cab driver, so you do this to encourage cab drivers, in general, to provide good service. Also, try this. At a restaurant I used to go to regularly, I was a good tipper. I got better and better service the longer I went there (until I moved).

Cheaters blush not because they violated a social norm, they blush because they got caught. If the norm were that strong for them, they wouldn't have cheated!

Also, people vote because they are aware that their vote *does* count. They are equals in the field, and this empowers them. Yeah, it may feel when millions are cast that your vote did not matter. But it does matter.

I'm sure this might lead to the rich refusing to buy insurance, because they always do the evil thing, but the poor will step up and make up the difference even if it means that they need to pay $40,000 per family for basic coverage, because they appreciate what this means for them and our country.

I'm on record hereabouts saying 6-3 against Obamacare. I'm hoping they rule that invalidating the IM invalidates the law.

They cynics out there would say that the authors of the law couldn't possibly be incompetent enough to accidentally leave out a severability clause in regards to the individual mandate; they did it on purpose because their real goal is single-payer (as has been stated by POTUS on more than one occasion). If there's no severability clause and the IM gets rules unconstitutional, they try the route mentioned in the article with the other provisions still in effect, ie, mandating that pre-existing conditions without allowing private insurance companies the ability to adjust their premium schedules = bankrupt insurance companies.

You get a rash of bankrupt insurance companies and slowly, inexorably, you end up with everyone on Medicaid/Medicare. The cynics would say this is all by design.

[T]here is plenty of evidence that other motivations influence our decisions: altruism, for instance.

"Not enough altruism for private charities and health care providers working pro bono to ever take care of the poor. That's crazy talk, and we absolutely needed the federal government to take over the health care system. We have altruism right in the sweet spot between having so much that we could get by without the government running our lives, and having so little that losing the mandate would be a real problem."

But so far only a threat to shoot people has ever helped the Communist Ideal work in practice.

Communism's ideal turns overnight into each according to whether they are the ones chosen by the Emperor/Party to be shoot, imprisoned in a gulag, or starved as examples to all to obey the Party.

And then along comes the surveillance drones, and the fiat currency and embedded chips. Maybe Communism can at last work in a Post-Christian culture...if only The Progressives can ramp up gun confiscation using a Fast and Furious devious plan.

Agree with Fen, ZeroCare must be going down hard and they're getting all the bugs out of the excuses.

Also love all the drivel about "social norms". The Lefties have been doing their damnedest to destroy those for 40 years, but now we're supposed to observe them because it's why we should have ZeroCare.

PS Tip is short for "To insure promptness", so stiffing somebody for lousy service is perfectly acceptable.

Why don't we just test this idea with two states one where you can buy insurance when you want, and other with the current system? I think a blue state should be selected to try the new system, because they are nicer people.

The notion of universal health care, or the belief that the sick are entitled to help is really embedded in the Hippocratic Oath and has become an implicit understanding in modern society, which is why at least we, at great costs to the average person, provide ER service to anyone who needs it. The issue is how best to provide and pay for health services. There many models of single payer that have had great success--Twain has one of the best.

I mean, if we live in a society that is happy to destroy the five thousand year old norm of marriage, who the hell believes that any other norm, new or ancient, will ever take hold or serve to efficiently govern?

1. It becomes insurance again. That is, it covers only catastrophic expenses. It does not cover routine medical treatment, contraceptives, etc. This makes it of value to practically everyone, and reduces the cost.

2. Providers are not compelled to provide charity care- they can do so if they wish, but they don't have to. Because, surely a large reason why people do not buy insurance is because they assume they'll be taken care of anyway.

"...which is why at least we, at great costs to the average person, provide ER service to anyone who needs it. The issue is how best to provide and pay for health services."

That's a nice, shiny talking point you have there, but if it were only about eliminating costs of ER services to uninsured, here's a fact for you: the costs of the ACA will absolutely dwarf the costs of providing ER services to the uninsured.

The ACA is about so much more than avoiding ER costs for the uninsured. ER cost avoidance is just a talking point to make idiots feel like we'd be saving millions of dollars from avoiding those costs while paying billions of dollars to do so.

completely moronic. this must be why all the true believers in global warming have given up electricity, heat, transportation and all the other modern conveniences. this must be why all the raise my taxes lefties voluntarily pay 60% income tax.

We tip a cab driver (or waitress) because we're paying a little bit above what we must, for service above what must be given. It doesn't matter at all that we'll never see the cabbie again. Giving the tip and maintaining the expectation means that our *next* cabbie will expect that if he does a good job, he'll get a little extra.

In any case, it's not altruism! It's an exchange of value, which studies have shown make both parties feel good. If someone feels forced to tip for bad service, they feel bad, resentful, and grumpy.

We tip cabbies, waiters, valets, and maids because they are servants, even if their services are now offered on a commercial basis.

Given that the default for mediocre service is still to give a tip, it's not compensation for service above and beyond. Rather, it's an echo from the relation between master and servant, when a master felt an obligation to give something extra to his servants, perhaps to merely secure their loyalty so they won't spit in his soup or do a slapdash job where he can't see, perhaps as a signifier that their relationship was not purely economic, but was a hierarchical social relationship of mutual obligation.

Like all socialist/communist experiments they have about a 70 year lifespan - 3 generations, and they are bumping up against that right now. Jumping on that train at this point, just before it runs out of track, is just incredibly nearsighted, and foolish.

If altruism was sufficient, we wouldn't need the left,nor it's totalitarian tendencies. We would only need those neat radios that get just one station to provide us with public service announcements to tell us what to do, and then we would do it, because we want to help.

When I drove taxi most of my tips came from generous drunks who'd lost their license to a DUI, had money to spend without the expense of maintaining a car and were quite pleased to get safely home from the neighborhood bar.

I can't understand everyone's hostility toward the "social norms" approach to policy. It has all sorts of attractive implications, the most obvious of which is the collection of taxes.

As we are constantly reminded, "government" is just a word for "the things we do together". Nobody's made that claim for the relation b/w a nasty old insurance company and its poor, exploited customers. So it follows from Eduardo Porter's logic that we'd all feel a much stronger compulsion to pay our taxes without any threat of penalties from the IRS than we would feel about buying health insurance when we're healthy.

He's got a couple of degrees in physics, so he must know what he's talking about.

It will be a great opportunity if it goes down in it's entirety and Republicans in control after 2012 have to create some new ideas. It will be a great opportunity that will be entirely blown by lack of imagination. I mean does anyone think that D.C. is the center of innovation? They should have a bunch of 15 year-olds sit down and compete to come up with the best plan.

The meter basically covers your nut and gas. My shift started at 5 p.m. and I hoped to make my first dime before midnight. The bars closed at a quarter to two. Most of my take home pay was earned by humoring sots between 1 a.m. and 3 a.m..

rh is on the right track. outlaw all health insurance with exception of catastrophic and your non catastrophic health care costs would be less than the difference between a cadillac plan and catastrophic coverage.

I think an increase in price transparency would also help. Hospitals and doctors ought to be required to publish their fee schedules and put together quotes so that people can comparison shop more easily and effectively. And price competition/efficiency gains would be more likely to result.

Additionally, more flexibility in fee structures and hospital ownership structures could also be beneficial.

Nurse practitioners or some other lower-cost licensing level for people performing routing checkups, etc. could also help reduce costs.

One of the biggest healthcare access issues -- and a reason I think you see a lot of emergency room use -- is just the difficulty of scheduling appointments with doctors. It's hard for people who work regular hours to take a day off with no notice when they're sick and just go to the local clinic as a walk-in that day. Because we don't have local clinics. You usually have to schedule some time in advance. Something to alleviate that -- maybe hours shifting (so that people can stop by the doctor between 6pm and 10pm, after they get off work), maybe something else -- would do a lot more to improve medical access in the country than this junky Obamacare law.

I think that it is best to be an extravagant tipper when the service is good and especially so when the bill is nominally small. Like bagoh20 I often think it appropriate to tip in excess of the cost of the service. Tipping rewards good service and extravagant tipping indicates that you recognize and value it and want the recipient to know all of that. When I know the server, which is often enough given my habits, I will lay on an envelop at holidays or times when I know they can use the extra money. Better yet, I know not one penny is going to taxes.

In the matter of insurance I will not buy it until I need it under the system under discussion.

"We tip a cab driver (or waitress) because we're paying a little bit above what we must, for service above what must be given. "

Tip a cab driver in Australia and you'll get scolded. It isn't the "social norm" there. They don't want to be tipped. They consider it demeaning.

"I think an increase in price transparency would also help. Hospitals and doctors ought to be required to publish their fee schedules and put together quotes so that people can comparison shop more easily and effectively. And price competition/efficiency gains would be more likely to result. "

That would violate the contracts that they are all compelled to sign. It is illegal to offer a price for a service that is less than the Medicare price and Medicare pays about 20% of the retail "price" charged.

Contracts were made legal, at least in California, by laws passed in the 80s. The payments to doctors by insurance companies are trade secrets and divulging them routinely gets you ousted as "not suited for managed care."

A friend of mine was the busiest GP in San Clemente. Many of his patients were city employees. Then the city signed a contract with an HMO. I don't recall if there was an option for opting out of the HMO. My son, who worked for the city as a paramedic had recently developed insulin dependent diabetes. You've probably heard how HMOs are good because they practice "preventive care." My son's diabetic education, a very important issue for new diabetics, was a video tape. I paid for him to go to a dietitian employed by an endocrinologist I knew.

My GP friend found his practice had vanished and he retired. He had declined to join the HMO a couple of years before.

This is the future if Obamacare is upheld. The law includes a ban on private care. Few people have noticed this yet. Totalitarian systems hate competition. Private care was banned in England and Canada but is coming back as the system fails.

The NYT puts this article in a section called the "Economic Scene," without stopping to notice the joke that its thesis is as far from economic analysis as one can get. One wonders what Eduardo Porter would say about all of those other governmental programs that always seem to come in way over budget - the medicare/medicaid fraud that every politician is always going to root out, for example. Or, for a more mundane example, government pensions where everyone games the system to max out on the benefit -- loading up on overtime, claiming disabilities that never seem to slow down the retirees once the benefits are coming in, blah, blah, blah. Same with tax deductions and the like -- does anyone really think people will not take advantage of an available deduction, regardless of its potential impact, out of altruism?

You have to be very deep into the tank to argue that altruism will contain costs in an ObamaCare fantasy land, when it fails spectacularly in every other interaction between the government and the economy. But it's quite likely that their tank has depths yet to be plumbed in defense of their man and his agenda.

Wisconsin just ran the experiment and we know that this social norm argument won't work.

Think about the social norm for workers in a unionized job: solidarity, union forever, workers unite, etc. Now, look at what happened when Wisonsin said, "we're not collecting mandatory union dues any more."

Other than new ways to bribe and graft, and fleece the taxpayers? No. But fortunately we don't live in a democracy where one capitol runs everything. We live in a Federal republic, where we have 50 different laboratories we can use to figure out what works and what doesn't, and so that we can configure systems to meet local needs instead of having to one system that will work - or, not - nationwide.

Scott M:...they did it on purpose because their real goal is single-payer (as has been stated by POTUS on more than one occasion). If there's no severability clause and the IM gets rules unconstitutional, they try the route mentioned in the article with the other provisions still in effect...

That doesn't make sense, Scott. If they wanted the rest of the provisions to remain in effect even if the court invalidated the mandate, putting in a severability clause would be the way to go - then the court wouldn't be able to kill the whole thing because of the mandate.

That would violate the contracts that they are all compelled to sign. It is illegal to offer a price for a service that is less than the Medicare price and Medicare pays about 20% of the retail "price" charged.

Contracts were made legal, at least in California, by laws passed in the 80s. The payments to doctors by insurance companies are trade secrets and divulging them routinely gets you ousted as "not suited for managed care."

I think that goes a long way to explaining why pricing is so out of whack in the medical industry. And exactly why I think legislation mandating full, public price disclosure to patients/customers is necessary. You'll never get a functional consumer-oriented market if all the prices are either (a) secret or (b) set by government fiat.

Tip a cab driver in Australia and you'll get scolded. It isn't the "social norm" there. They don't want to be tipped. They consider it demeaning.

I can see that. Tipping is ultimately about master and servant, and some people despise service. That would fit with the Australian national character too.

I would agree with the 50 lab's analogy but for 1 leetle point. No "across state lines" for insurance, so how do you tell whats acceptable to the people?

Couple decades ago our esteemed legislatures passed some freakin' insurance law whose ultimate result was that we had 1 insurance provider for the whole state. They had to convene a special session just to fix that little error.